How to survive on one wage when baby arrives

Couples who are used to living on a combined income with no dependents are often scared about how they will survive on just one income when starting a family.

For at least a few months after the birth, most couples go from two incomes to one and some desire to stay at home with the child for a few years, which can mean a big change in living conditions.

According to the Australian Bureau of Statistics, there were 308,065 babies born in 2013. The median age of first-time mothers was 29.3 years. These mothers-to-be are often in the peak of their earning career and the financial burden of stopping work can be daunting.

But even couples caught by surprise still have nine months to get into financial shape. Here’s how.

My 15 tips for living on one income:

1. Save for it – You have nine months from the time that you find out you’re pregnant until the time your bundle of joy arrives – so put money aside every pay while you’re still earning a salary. Set up a high interest savings account and be disciplined with how much you regularly contribute. Cultivating long-term financial habits and making sacrifices while pregnant, could make a big difference on how long you are able to stay home with bub.

2. Luxuries aren’t necessities – Look at all your household and personal purchases: are they a ‘want’ or a ‘need’? Often the more we earn, the more we spend so cut back on wastage now to save every possible dollar. Cartons of beer and going out to restaurants and buying daily coffees are ‘wants’ and should be cut back on. Delay things you can live without like new clothes or holidays.

3. Eliminate credit cards or personal loans – It’s hard to cut back when you are used to a certain lifestyle, so reduce temptation by paying off credit cards and personal loans so you are forced to live within your means. This measure will also mean you don’t have expensive monthly repayments to worry about. If you can't do that, at least shop around for credit cards that have a lower interest rate or allow free balance transfers.

4. Reduce expenses – Look at all your outgoings – utilities, petrol, groceries, insurance and come up with a plan to reduce them. Use a comparison service such as finder.com.au to find cheaper. There are some very good deals around and you may be paying too much. Use websites to track when fuel is cheapest and only fill up on those days, compare electricity and gas providers - sign on for direct debit and electronic bills to reduce monthly costs. Don’t run air conditioners unless essential and turn off lights and appliances that aren’t needed and take shorter showers.

5. Accomodation – Look closely at your home loan and decide if refinancing or switching to interest only in the short term could help you tackle living on one wage. If you have been making additional repayments on your mortgage you may even be able to reduce payments for the time you are not working if you have built up equity. If you are renting, consider a cheaper location or property. You could even consider renting out a spare room.

6. Government support – Arrange any Government financial support you are entitled to. The biggest financial help to new parents is the Baby Bonus or Parental Leave Pay. The Baby Bonus is a $5000 payment for a first child or $3000 for subsequent children to help cover the costs of a new baby. The money is paid in 13 fortnightly instalments. Baby bonus is not taxable. Or there’s the 18-week Paid Parental Leave set at the minimum weekly wage if the primary carer’s income is less than $150,000 a year. Recipients must meet a work test in the lead up to the child’s birth/adoption. Family Tax Benefit A aims to help families with the cost of raising children. Depending on how much you earn, you can get up to $176.82 a fortnight for each baby. Family Tax Benefit B is an extra payment of up to $150.36 per fortnight for children under 5 years for families with just one main income, including single parents and families with one main breadwinner. To qualify for the payment, the primary income earner must earn less than $150,000 a year.

7. Buy second hand – Don’t be too proud to buy quality used items. Prams, nursery furniture and even toys can be picked up at a fraction of the price on sites like Gumtree or eBay. Parents-to-be can fall into the trap of overspending on baby items which can add hundreds of dollars to the household budget.

8. Have a baby shower – Friends and family are generally eager to help out so make a list of basic items you need for the baby which they could buy as gifts. By nominating what you ‘need’ you will have less to buy come the birth.

9. Have an emergency cash fund – As an extra safety net, have money set aside for unforeseen expenses like car repairs or medical bills. Saving for this should be included in the pre-baby months.

10. Bulk purchases – Buy in bulk when household essentials such as toilet paper and washing powder come on sale. Investigate discount warehouses like Costco for everything from nappies to clothing. Travel to different stores to take advantage of discounts. Good items to stock up on include meat and non-perishables.

12. Get something for nothing – websites and newsletters offer free products in exchange for thoughtful reviews. Becoming a helpful online reviewer can mean access to free gadgets, books and movies. Become a mystery shopper to enjoy free meals and sign up for free samples.

13. Using coupons – finder.com.au compares about 500 different coupon codes from retailers offering different discounts such as up to 35 percent off (from Run Stop Shop), free shipping and more. You could save even more if you use coupon codes on retailers’ already reduced items so don’t be scared to browse through their sale sections too when you need to buy gifts for birthdays and Christmas.

14. Swap or borrow – The time-honoured system in which you trade either goods or services for the goods or services of another individual can be very useful when surviving on one wage. Sites like u-exchange list hundreds of members in each state offering services such as hairdressing, website design, guitar lessons, caravan storage and plastering in exchange for various things. Look for opportunities to use your skills while a stay-at-home parent.

15. Learn ways to socialise that don’t cost money – Family outings don’t have to cost money. Instead of eating out or going to the movies, think about what you can do for free. Parks, community events and playdates with friends are great ways to socialise without costing a cent.